Computer Associates Founder Charles Wang Government's Next Target

By Maureen O'Gara	Article Rating:
September 25, 2004 12:00 AM EDT	Reads:	27,871

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Ex-CA CEO Sanjay Kumar's Looking at Doing 100 Years

One thing about the "get-out-jail" deal that Computer Associates signed with the government the other day - the government's investigation ain't over yet.

Now it's out for restitution and has bound the company in an unbreakable promise to help it shake any ill-gotten gains out of present and former CA officers or employees, whether or not they were parties to any fraud, but specially if they were.

The feds aren't limiting the hunt. The agreement CA signed suggests that though the government's investigation has been restricted up until now by the five-year statute of limitations on securities fraud, the government is pushing the clock back further in seeking disgorgement.

Sources say that the government is eyeing 1998, the year that CA's top three executives Charles Wang, Russell Artz and Sanjay Kumar divvied up a $1.1 billion bonus that the government will contend was based on jiggered financial results.

The indictment against Kumar that the government unsealed the other day specifically charges CA with committing fraud from January 1, 1998 through September 20, 2000, a bit of "backdating" on the government's part that reportedly surprised the company's current management who thought it would stop at 2000.

Neither Wang nor Artz, co-founders of the company, have been implicated in the securities fraud yet although they could be at risk with the government, which privately admits Wang is being investigated, pushing the clock back. Wang was CEO of the company in 1998 when Kumar, his successor, was president and COO. Kumar didn't become CEO until August of 2000. Artz is executive VP of CA responsible for its eTrust security line.

CA's agreement anticipates the government pursuing "criminal prosecution" and "civil trial or other legal proceedings." It also anticipates that CA itself might get the money that people disgorge. Then again, it also anticipates that CA could wind up a defendant in the proceedings.

With Kumar backed into a corner and facing serious jail time, his only bargaining chip will be to rat out Wang and claim that backdating contracts was a practice he inherited from him, sources close to the situation say.

By the way, after Kumar was kicked out of the company in June, he complained to us that his share of that huge bonus, which represented all of CA's profits for the preceding three years, wound up being worth only $25 million because of lockup restrictions, the subsequent drop in CA's stock and the $70 million he had to return because of a stockholder suit.

Ex-CA CEO Sanjay Kumar's Looking at Doing 100 Years

Published September 25, 2004 – Reads 27,871
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More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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Most Recent Comments

	LadyJustice 09/28/04 01:34:31 AM EDT
	I don't know if Wang is involved. I do believe our system of justice is meaningless if we let the wealthy influence it with philanthropic works. We would not ignore a drug dealer as a suspect for crime if he were to donate his ill gotten gains to charity. These very wealthy CEOs put themselves above the law. Securities fraud can destroy lives too. The only way to deter crime is to relentlessly pursue the criminals and punish them adequately. If we aren't willing to do that, then we're wasting our time and stating that the siutation is hopeless. The punishments need to hurt enough that other CEOs and management will be afraid to commit this type of crime. Remember these men are wealthy criminals whose victims were their employees & their shareholders. I think it would be fitting to see them chased down an alley and handcuffed on the next episode of 'COPS', but perhaps that is expecting too much justice.

	Paul Fila 09/27/04 04:44:55 PM EDT
	I believe they should be looking at ALL Fortune 500 exec's seems to me AT&T executives did the exact samething in 2003 and we employees were fired/lay'd off/no longer needed ha. ....

	ShanghaiWang 09/25/04 04:09:21 PM EDT
	Don't knock Charles Wang completely - he's also well known for his philanthropic works with such causes as the Make a Wish Foundation, Smile Train and others. His donation of 25 million dollars to Stony Brook University towards the creation of the Charles B. Wang Center was the largest in history to a SUNY school!

	confe$$$ 09/25/04 04:07:42 PM EDT
	I wonder if Wang (or Kumar for that matter) will have the courage that CA's Steven Woghin did when he pleaded guilty in federal court and said, in an emotional admission of guilt, "Your honor, I am ashamed to be standing here today. It is entirely inconsistent with my behavior through a 30-year legal career." I won't be holding my breath but you never know.

	Bad Hockey News 09/25/04 04:07:12 PM EDT
	Hey this could be VERY serious. I mean, Charles Wang currently owns both the Islanders and Sound Tigers!

	Messy$$ 09/25/04 04:05:15 PM EDT
	This is a no-brainer. The SEC alreasy said in its complaint that during the years Wang was in charge between Jan. 1, 1998 and September 30, 2000, CA "engaged in a widespread practice that allowed for the premature recognition of revenue from software licensing agreements." Wang already got sued for this - and he and Kumar returned some of the $1 billion to settle. Sounds now like the SEC and DOJ are coming after him/them for the balance.

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